Growth in APAC web whizzes bucks global trend

Internet Dealbook’s Benjamin Chong, a partner at Right Click Capital, says Asia Pacific deal prices were being driven up by greater interest in the region from US and European based investors....pictured with Lisa Cumes of the Founder Institute.
Photo: Michele Mossop

Heightened interest from US and Europe-based investors has seen a surge in big money investment in tech and web companies in the Asia Pacific region, new numbers from market tracking firm internet Dealbook have shown.

The firm, which is the publishing arm of investment firm Right Click Capital, tracks deals globally and found that in the first quarter of calendar year 2013 total deal value and average deal values are down significantly on the same time last year. However the Asia Pacific region has bucked the global trends, with a world leading average deal size of $US22.8 million, up 34 per cent on the $17 million average for 2012.

These deals include investments in tech startups, as well as buyout. Asia Pacific is also the only global region to experience growth in the value of deals occurring in the first quarter of 2013 over Q1 2012, with deal value up 51 per cent. The Asia Pacific region also leads the way in the average deal size for investments (rather than acquisitions), average investment is $US24.1 million. The US meanwhile remained the king of big money acquisitions, with the average buyout coming in at $US166.4 million there.

Globally deals down

Globally the quarterly numbers showed $US9.6 billion of deals tracked in the first quarter, this was down 55 per cent on $21.5 billion in the first quarter of 2012. All regions except North America had experienced a reduction in the total number of deals, and the average deal value for acquisitions had dropped significantly, by 62.7 per cent, to $US124.5 million from $US333.6 million in 2012.

With much of the world’s startup focus remaining on Silicon Valley, the US still accounted for the vast majority of the 910 deals tracked globally in the first quarter. It recorded $US7.2 billion, or 75 per cent, of the $US9.6 billion global total..

Media, e-commerce and software and services related companies were the only sectors to record an increased number of deals.

Intent Dealbook’s Benjamin Chong, a partner at Right Click Capital, said Asia Pacific deal prices were being driven up by greater interest in the region from US and European based investors. He said these investors saw an opportunity to tap into high quality technology companies away from the saturated US market.

Mr Chong, who also sits on the Sydney Seed Fund said the quarterly statistics were positive for local entrepreneurs, but that the lure of the US was still present for many.

“In the last quarter we have seen a number of Australian companies get funded, and my expectation is that going in to the second quarter, as we head to the end of the financial year, there will be more activity," Mr Chong said.

“It probably does take firms a bit longer to get funding here than if they were elsewhere, but at the same time, those with good founding teams and great technology are getting funding. I know a company recently closed a round of funding in a matter of two weeks, so there is money around in Australia."

Despite the fall in global numbers for the quarter, the positive findings in the Asia Pacific region, showed there was plenty of scope for future growth in technology and internet related businesses locally.

“Anecdotally people are still very confident in tech and want to invest in something they believe will make a significant impact on people’s lives," Mr Chong said.

“We are seeing a lot of opportunities to invest, and there is no shortage of people keen to start a tech business, so the lure of tech is very high for investors compared to other industries."